Mortgage Rates Have Moved Lower - It May Be Time To Lock

Mortgage rates moved are moving in the right direction if you are the consumer looking for a home or might still want to do a refinance. Even though we have not seen a dramatic change in the mortgage rates, we still saw some gains as the Mortgage Backed Securities (MBS) continues to buck the resistant levels. Reason being, when the money is moving in to bond markets--and specifically into MBS, prices of those securities rise (more demand) and the yields (or "interest rates") fall. That leaves the most prevalently quoted conforming 30yr rate for top-tier scenarios at 4.5%, with a few lenders at 4.375%.

Now that the 10yr note is below 2.70% where it has run into resistance selling a number of times since Jan, it may be the time to lock. The risk factor is becoming more and more prevalent and even though the gains could be seen if you decide to float, we have seen it turn faster upward than it has gone down. Overall the outlook for interest rates is still for rates to move higher. The recent improvements are based on uncertainty about the stock market and the geo-political situation with Russia.

We are not turning bearish in the near term but reacting to how the bond and mortgage markets have traded when the 10yr declines below 2.70%. At this point is where the chances increase as the market invites a correction of some size very soon. It could be tomorrow or it could continue for several more days. The point is that each day of improvement makes a correction more likely. Let's clear the plate today and see how the market reacts. Next week is employment week, making it a difficult trade to expect improvements. The early estimate is for non-farm jobs to have increased 190K in March.

In summary, all week we have been cautious on floating, due to the potential to move away from the high side of the range and for a client to receive the benefits of lower rates and fees. Now, in my opinion, is the time to take those gains and lock. We have seen too many times a move upward to the high side of the range with NFP next week, and outside of unforeseen event I think that's to be expected once again.